375: Navigating The Shipping Crisis And The Ultra Competitive Amazon Landscape With Bernie Thompson

00:00
First off, I’m pleased to announce that tickets for the 2022 Seller Summit are on sale over at sellersummit.com. Now, the Seller Summit is a conference that I hold every year when there’s not a pandemic that specifically targets e-commerce entrepreneurs selling physical products online. And unlike other events that focus on inspirational stories and high-level BS, mine is a curriculum-based conference where you will leave with practical and actionable strategies specifically for an e-commerce business. Now, if you’re an e-commerce entrepreneur making over 250K or a million dollars per year,

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We are also offering an exclusive mastermind experience with other top sellers. The Seller Summit is going to be held in Fort Lauderdale, Florida from May 4th to May 6th, 2022. And for more information, go to sellersummit.com. Once again, that’s sellersummit.com or just Google it. Welcome everyone. You were listening to the My Wife, Quitter, Job podcast, the place where I bring on successful bootstrap business owners and dig deep into what strategies they use to grow their businesses. Now today I have an extra special guest back on the show, Bernie Thompson.

00:57
and Bernie runs an eight figure e-commerce store called Plugable and he relies on Amazon as his primary selling channel in possibly one of the most competitive niches, electronics. So in this episode, we discuss some of the challenges of selling on Amazon in the current landscape. Now I just want to apologize ahead of time for the audio quality in this interview. Now I considered not publishing this episode, but the quality of the interview content was so good that I decided to publish it anyway. But before we begin, I want to thank Klavia for sponsoring this episode.

01:27
Always excited to talk about Klaviyo because they’re the email marketing platform that I personally use for my e-commerce store and it depended on them for over 30 % of my revenue. Now you’re probably wondering why Klaviyo and not another provider. Well Klaviyo is the only email platform out there that is specifically built for e-commerce stores and here’s why it’s so powerful. Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week. Easy. Let’s say I want to set up a special autoresponder sequence

01:56
to my customers depending on what they bought, piece of cake, and there’s full revenue tracking on every email sent. Klaviyo is the most powerful email platform that I’ve ever used, and you can try them for free over at klaviyo.com slash my wife. That’s K-L-A-V-I-Y-O dot com slash my wife. I also want to thank Postscript for sponsoring this episode. Now, if you run an e-commerce business of any kind, you know how important it is to own your customer contact list. And this is why I’m focusing a significant amount of my efforts on SMS marketing.

02:23
SMS, or text message marketing, is already a top five revenue source from my ecommerce store, and I couldn’t have done it without Postscript, which is my text message provider. And why did I choose Postscript? It’s because they specialize in ecommerce stores, and ecommerce is their primary focus. Not only is it easy to use, but you can quickly segment your audience based on your exact sales data and implement automated flows like an abandoned cart at the push of a button. Not only that, but it’s price well too, and SMS is the perfect way to engage with your customers.

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So head on over to postcook.io slash Steve and try it for free. That’s P-O-S-T-S-E-R-I-P-T dot I-O slash Steve. And then finally, I wanted to mention a new podcast that I recently released with my partner, Tony. And unlike this one, where I interview successful entrepreneurs in e-commerce, the Profitable Audience Podcast covers all things related to content creation and building an audience. No topic is off the table and we tell it like how it is in a raw and entertaining way. So be sure to check out the Profitable Audience Podcast on your favorite podcast app.

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Now on to the show.

03:28
Welcome to the My Wife, Quitter, Job podcast. Today, I’m lucky to have Bernie Thompson back on the show. Now, Bernie is someone who I’ve had on multiple times. The last time was back in episode 230. And in case you’ve forgotten, Bernie runs an eight figure business called Plugable, which is a company that sells USB and Bluetooth devices online all over the world. In addition, he’s built his own tools in-house to manage his Amazon business. And one that he sells is called PPC Ninja.

03:55
Anyway, the reason why I have Bernie on the show today is because he runs such a large Amazon business in an extremely competitive area. And as a result, he’s the perfect person to talk to about the current Amazon landscape. And with that, welcome back on the show, Bernie. How are you doing today? Hey, great, Steve. Thanks so much. I’m glad to be back. It’s been a while. We haven’t had a chance to see each other in person, of course, since the since the pandemic. I hope to see you. I really seen anyone in person in a while, so.

04:24
It’s not just you. So just in case the listeners don’t remember your business, just give a very quick recap of what you sell, how many SKUs you have, and kind of give us an idea of how often you launch new products. Yeah, so Plugable was launched in 2009. I’m a guy who used to work at IBM and Microsoft and so kind of come from this technology background and really wanted to build an electronics company, a better device company. But then

04:52
You know, the time I did that in 2009, you know, doing that and kind of being Amazon focused about that was our choice. And actually it turns out to be a good choice because we’ve had kind of a 10 year rising tide on Amazon and difficult area to get into electronics. You know, I think if I had started this business, even a few years on either side of that, you know, I probably would have failed. But interesting. Why do you say that?

05:22
Well, because if I’d started it a bit earlier, I would have had to build out a lot more infrastructure in terms of logistics and had to get into traditional electronics distribution faster. And I think I would have hit walls there and just would have had trouble scaling the business. And so, you know, would have probably gone through a period of failure. Maybe I could have kind of waited that out or survived that, but probably would have gone through a period of failure.

05:51
It would have likely, given my resources, have meant I would have had to stop. So that’s like five years earlier. Then five years later, so Plumble has never done black hat stuff. We’ve never purchased reviews or, you know, we try to follow the rules on Amazon. So if I had started five years later, that was right in the middle of the Amazon gold rush, you know, 2014 or whatever. I would have just gotten.

06:19
run over by everybody. Because we did actually, we’ve grown every year since we started in 2009, but a lot of those year, those gold rush years, we actually did not grow that fast because we were basically getting black hatted off the platform. But because we started when we did, we had quite a lot of brand momentum and we were able to kind of survive that. But if I had started right in the middle of that, I think I just would have gotten run over. Right. Actually, can we just comment on black hat real quick? Do you feel like it’s

06:49
much more under control these days? Yes and no. think, you know, compared to 2014, 2015, you know, the activity that that’s occurring, you know, is much more muted. It’s much more subtle. It’s much more sophisticated, you know, but because Amazon operates at this massive scale, mean, Amazon’s intent is to create the most competitive platform, you know, on the planet in order to drive down prices in order to, you know, make

07:17
Amazon the place that everybody goes to buy everything and you know that that competitive competitiveness does drive down prices. But it does mean that even the smallest advantage will determine you know market success or failure and you know so all of these techniques you know to to drive up rank and stuff you know there’s they’re still super effective I mean.

07:40
These last two or three years in our area, electronics, has just seen a flood of what we call five-character Chinese brands. They pick basically random five characters, get a US trademark on it, get into the brand registry program. the US trademark office is literally overwhelmed with applications from Chinese companies for trademarks. And I was just reading an article on it and they didn’t mention Amazon. didn’t know why it was, they were speculating about why was this happening.

08:10
it’s easy. Amazon is the one channel for physical goods in the United States that’s dominant. And if you’re going to have an Amazon strategy, you should do Amazon brand registry. And everybody in China knows that. a lot of these brands, have nothing to lose. mean, if they get caught, they get kicked off the platform, they can just come back in another form. Now we’ve had some interesting things happen the last few months where some very large brands have

08:39
have gotten kicked off the platform for activity they’ve been doing for years. And that may provide a little bit of a deterrence effect. Although ultimately, I think because the Chinese companies are fairly unreachable and fairly untraceable even for Amazon, I think the deterrence will be a little limited. But a lot has gotten better. mean, just to pick one of quite a few things that have gotten better, Amazon’s actually shifted to become a pay to play platform.

09:07
If you do any search on Amazon right now, most of kind of top of the fold are ads. guess what? That’s actually kind of good for WhiteHats because at least it’s a level playing field. You know, I can buy ads and I can get that position. Whereas, you know, about four or five years ago with everybody gaming organic, you know, and we weren’t, you we were often, you know, other than our older, more successful products, our newer products were

09:37
getting pushed way down the organic search results, nobody would ever find them. And we had really no way to surface them unless we were also willing to do Black Hat. But now, you can always surface things with ads. So it’s a pay to play platform, but it’s less susceptible to Black Hat. Now, I’ll caveat that with one thing, which is Amazon is completely non-transparent about how much click fraud happens on the Amazon platform.

10:06
And I can guarantee that there’s competitors out there that are extremely motivated to do what in computer security, we might call a denial of money attack. have click farms and be clicking on competitors’ ads and spending their money. And we have no idea how rampant click fraud is on Amazon, but I would suspect it’s quite rampant.

10:32
I think with any PPC platform, it’s always been a huge problem. Actually, that’s why I stopped almost all the PPC platforms except for Google and Facebook, actually. I used to use a whole bunch of these shopping cart platforms. And then one day, I think I spent like 500 bucks in a day on this one item and that was unheard of. And I looked at the logs and it was just obviously a bot. I tried to appeal that and they refused to give me my money back. And they’re out of business today, of course.

11:01
but yeah, I’m sure there’s just rampant fraud going on. When you say sophisticated black hat, can you just elaborate a little bit on that? I’m just kind of curious. Yeah, it’s not sophisticated in the sense that it’s not able to be understood or it’s deep dark secrets or anything. just, it used to be so blatant. I mean, you would have a lot of these brands who were kind of

11:31
giving refunds out in the open for five, you know, very directly for five-star reviews kind of thing. So now it’s, if you are looking in the seller forums, you you see lots of discussion of rebates for launches, but everybody is kind of aware that a lot of the services that offer that have been taken down at various times and

11:59
Sellers who and brands that use those services have gotten taken down at times. And so, you know, like I think a lot of the, you know, the bigger Chinese brands, for example, and probably some of the U S brands, you know, they, for example, one type of sophistication is, you know, the kind of services that are third party services that are offered for rebates, they bring those in-house, you know, where they can control the lists, they control the information.

12:28
And actually the big round of, you know, MPOW and Aki and stuff getting suspended in China, really the origin of that was they had been using some kind of third party service. think it was a Chinese run service. I’m not sure. But, you know, and they had a, they had a breach and all the data got dumped. And so it became extremely apparent what was happening and who was doing it. and, um, rumor was FTC got involved.

12:58
In any case, Amazon was kind of forced to act when Amazon actually historically has been kind of slow to act or perhaps wanting the price benefits they get from these Chinese brands more than they wanted to police their behavior. Yeah. Yeah. And so they were forced to act. so I think the bigger brands who are still doing

13:27
these sort of black hat and gray hat activities, you know, they see this happening and they realize, well, okay, we really need to control what we’re doing. We’re going to kind of bring this in-house into loyalty programs and things like that. Okay. That makes sense. So it’s less overt basically is what you’re saying. Yeah, that’s right. So how has launching new products for Plugable changed? Let’s just talk about even since COVID. Well, okay.

13:53
Well, since COVID, think the biggest story is we’re in electronics and it’s hard to get product. So that’s the big story there. And we can talk about that as a whole separate thing. But yeah, I mean, you as far as launching products in general, yeah, I mean, we’ve just become more more dependent on our skill at using Amazon advertising and being willing to, you know, really sink money into advertising in the early months of a product launch, but have to be, you know, very sharp about how we do that so that

14:24
because there’s really an opportunity there to completely blow everything with advertising because you’re basically, fighting an uphill battle those early weeks and months until you’re able to get the number of reviews up. But on number of reviews, we fought for years with Amazon in terms of kind of selling the idea to executives and things at Amazon to bring Vine over to 3P. And that’s there now.

14:51
And that’s one of the reasons why you really need to get brand registered if you’re going to launch a brand on Amazon is to get access to the Vine program, which allows you to give away in an Amazon endorsed way, you know, up to I think it’s 30 products and get, you know, reviews from the Vine network where, you know, Amazon is choosing the people and there isn’t, you know,

15:18
a brand controlled gamesmanship to it. And so, you know, and it’s an Amazon run and endorsed program. And so that’s, that’s what we use to kind of get over that credibility hurdle at launch. Of course, you know, when you’re, for example, you know, advertising a product and it’s sitting there at zero reviews, you’re going to pay way more, you know, for those sales, you’re going to have a much lower conversion rate. so Vine kind of helps get you over the hump there.

15:46
And then, then it’s just, you know, we’ve always been a kind of a content marketing heavy company and a PR heavy company. And so, you know, between the advertising and then a lot of, a sense, traditional marketing, but maybe non-traditional in the sense that we’re very content focused. You know, that’s basically how we do it. Can we talk about the content marketing? So what specific content do you put out?

16:11
You know, there’s a lot to talk about with most products and certainly with our products. know, electronics, everybody buys a lot of electronics, right? But everybody has that fear that they’re going to buy the wrong thing. And everybody looks at that piece of electronics and goes, is that really going to do what I’m hoping it’ll do? you know, so we have a lot of stories to tell about, you know, why did we do this new dock?

16:38
what, you know, which laptops does it work with and what quirks do I need to worry about? And, you know, will it, you know, give me two monitors? Will it give me three monitors in every case on Windows and on Mac? You know, there’s, there’s, it’s really just product education, but you know, if you, if you take a content marketing mindset, it’s a, it’s a whole bunch of interesting stories, you know, and those stories, you know, have different audiences for them. You know, we do content, video, you know, that’s really,

17:07
that we’re targeting explicitly at Mac owners, of course. And then we’ll do other content that’s targeted explicitly at Chromebook owners. And so there’s really an endless amount of stories to tell. And so we just kind of prioritize our audiences and prioritize our stories by how interesting or exciting they are. And sometimes what’s interesting and exciting is our products, but sometimes what’s interesting and exciting is just the other company.

17:35
products. Apple’s just launched a new MacBook. What works with it? That’s a great opportunity to talk about your products. So outside, think products outside of the sort of kind of compatibility area, it’s still the same thing though. It really starts with who’s your target customer and why would they buy the product? And if you’re lucky enough to have the kind of product that gets people excited, really

18:04
you know, have a chance to speak to that and really, you know, illuminate in either text or video form. And of course, video is becoming more more important. You know, why, you know, all the things about your product that are exciting, that are things that in chair. Are blogging or YouTube? Like what channels are your content being published on? Yeah, it’s both. So we, and email. So, and actually we talked.

18:30
Steve, that was one of your pieces of advice for us. I don’t know if you were one of ones. long time ago, yeah, because you weren’t doing email, I remember. Yeah, we had like a 50,000 email list and we weren’t really using it because we didn’t want to bother people, basically. Yeah. And you were like, Bernie, you’re insane. So I’m less insane now. That’s great. I mean, I can understand your mentality because we’re both engineers. So yeah, that’s just something I guess you had to get over.

18:59
So do you use this email list now to launch products? Yes. Yeah. So we’ve actually done what we should have done. Thank you so much for kicking my butt, and getting me going on that. It took a long time though. That was probably two or three, maybe three years ago you scolded me about that. it took me a year or two to get going.

19:21
Yeah, we use active campaign. We really try to highly segment our audiences. As I was saying, really, we have many different audiences for our products and we want to get as specific as we can afford to because, yeah, that same motivation that I had not to bother people. Well, okay, if I can really kind of segment my audiences down to where I know, for example, that this is a Mac user, if I actually deliver

19:50
Mac specific content to a Mac user, they’re going to appreciate that generally. You know, and so it’s really all about segmenting, targeting, and thinking of us almost as, you know, kind of journalists for these specific audiences, you know, and giving them the content they want to hear. And so, yeah, that’s the strategy we have. I’ve got a full, you know, so Plugable, you know, we’re…

20:17
We’re fortunate to be at the scale where I have a full-time videographer. I have a full-time content writer, you know, and I’ve got a whole team of other, you know, kind of generalists and people around them. And so, because this does take a lot of work to do this, like actually that thing with ActiveCampaign and, you know, really doing that segmenting and really having those targeted, you know, targeted content to each of those segments, gosh, it’s a lot of work.

20:42
If I was just having to do it on my own, that’s part of the reason I didn’t is because of the amount of work involved. But there’s an answer to that, which is you just loosen up a little bit and you allow yourself to not segment so tightly and have fewer, more broad categories. If you can just do even a little bit of segmentation at a high level, that’ll really improve your open rate and…

21:09
you know, conversion to sale rate on emails. So, and then as you grow, can, you know, maybe afford to grow your effort and get your segmenting to be even more targeted. So I’m curious. So last time we talked, you were only on Amazon, Walmart and Newegg. Is that still the case? So for the online platforms, yeah, I mean, we’re forgetting some, but you know, like we were on Google. We actually dropped out of Google temporarily.

21:35
Is this Google shopping? Yeah, Google shopping or actually buy on Google, I think is what they call it now after a fifth or sixth rebranding. But we also distribute through the largest electronics distributors in the US. yeah, it’s not, and that’s been true for a long time. I mean, that’s been five or six years. So, you know, our product is pretty widely available and through those electronics distributors, you know, you’ll find our product all over the

22:04
I mean, pretty much anything detail, you’ll find us and if you’re a corporate buyer or government buyer, you’ll find us. Now, all that said, Amazon still dominates our sales because Amazon has pretty darn near monopoly market share in electronics right now in the United States. The reason why I asked that question was, how did you build this 50,000 email list? the email list, right, yeah, exactly. Well, so some of it comes from customers who have

22:34
signed up for things. We are constantly providing opportunities on the website for customers to sign up to be informed about things. Some of it is that. Some of it is we have… give me an example of sign up for things like, do you give away lead magnets or cool stuff? Funny enough, our best thing is when we’re out of stock of stuff.

22:59
So we’ll have a hot product that we’re out of stock of and we’ll have a, you know, sign up for our newsletter to get notified when we’re back in stock. Funny enough that that little practical thing is, you know, perhaps our best channel. That is a great, you know what? I’m not doing that right now. I’m going to start doing that. Yeah. No, it really, it’s, it’s super effective. Okay. So you’re gathering emails just from people coming to your site, maybe through content of some sort.

23:27
Because I noticed when I was on Plugable just like five minutes ago, all of your links actually go to specific marketplaces, right? You don’t actually take transactions on your site itself. Correct, that’s right. And if you want, can talk about why we don’t, which comes down to a US sales tax reason. Really? Can you elaborate? Yeah. So unfortunately, shops and carts you run yourself right now, all of the…

23:55
Tax regulations here in the US are kind of screwed up for that. So on one hand, have Amazon has taught consumers to expect a one or two day delivery or fast delivery, at least in a lot of segments of products. Well, the only way to deliver that fast delivery is to get the product close to the customer. It’s to use a warehouse network of some kind. mean, obviously, FBA, Amazon’s own warehouse network is the one that…

24:22
that is kind of the leader on this and Amazon has warehouses in something like 40 states. But there’s lots of other really good fulfillment networks that have cropped up and are cropping up. I the other one that we use is Deliver, which we really like. I don’t know how many states they’re in. think it’s, I could look in a spreadsheet, but basically eight or 10 states, like that. Well, every one of those states,

24:50
As soon as you’re using a fulfillment network that has warehouses in that state, that state expects your business to be registered in the state, collecting and filing and collecting, collecting remitting sales taxes, which requires filing, you know, and this, in that registration and filing burden and kind of understanding all the tax regulations of that state, that’s really complicated. get all these service providers that say, Oh, it’s easy. We’ll handle it with software. They, they’re only covering part of the problem.

25:19
It’s not your time that they’re spent. They can’t stop your time from getting spent on all that paperwork. They can do kind of maybe the actual transaction side of it, kind of gathering the transactions and doing the calculations. your signature’s on the line, you’re writing the checks. So anyways, yeah. And so the trouble is that we get caught where we need to use these fulfillment networks. But then if we do,

25:48
you know, we’re expected to collect and remit sales tax and potentially causes income tax nexus too. And if you’re only using marketplaces, this is taken care of for you. So in the last few years, almost all of these states have passed what’s called marketplace facilitator laws that make the big marketplaces like Amazon, Walmart, eBay, put them on the hook to collect and remit.

26:16
the taxes, is great. So it’s taken off the small businesses plate. However, Shopify is not a marketplace and the same with WooCommerce or any other cart systems. So you’re still on the hook. So basically if you use FBA and you’re not tax registered in 40 States, you can’t really be using Shopify without getting yourself into state tax trouble. someone of your scale, at least.

26:45
Well, you know, it eventually catches up with you because, what will happen is even if you’re smaller, you know, like right now we’ve got this great environment to sell your e-commerce business. You know, there’s an asset bubble in my view, but in any case, it’s really attracted a lot of big funds, you know, that are buying e-commerce companies. Well, when you go to do that transaction, this will all come to roost. They’re going to take all of that tax

27:14
know, that accumulated tax liability in the eyes of these states, and they’re going to take it out of your transaction value at that time, because they’re going to want to clear the decks of any tax risk. Sure. Okay. And so, you know, it really can screw up transactions, and it really can take a gigantic bite out of transactions at that time. You know, if you’re going to hold your business forever, and your business doesn’t grow, you’re probably okay. You know, but even if you hold it and your business grows, it just becomes this

27:44
of unsolved problem that’s always hanging out there. And the states are terrible. They’re just terrible. They don’t let you get out of the problem because if you try to go, you know, just kind of register with the states on a go-forward basis, just say, ah, okay, well, I’ve gotten big enough. It’s actually a meaningful amount of tax I’d be paying the states. Let me register now. The states all want to go back in time and strip and make…

28:10
In theory, sales tax is a tax on the consumer that the business is just on the hook to collect and remit. But actually what the states do is if they feel like you should have been collecting the whole time and you’re not, they’ll go back in time and make you pay this tax that’s supposed to be a consumer tax out of your pocket. And so they put you in a perfect trap where you just can’t get out of it. You can’t afford to do the paperwork when you’re small, but then as you grow, it becomes a problem that grows with you.

28:40
Yeah, so I do think, although it’s a terrible dilemma, it actually is an important dilemma to at least have your kind of eyes open about.

28:52
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29:21
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29:50
And if you tell Steve that I sent you, you’ll get a hundred dollar discount. That’s E-M-E-R-G-E-C-O-U-N-S-E-L dot com. Now back to the show. We’re actually undergoing a sales tax audit right now, in fact, for California. is one of the worst ones. It is. Yeah, we are. We’re registered in California. We’re registered in a bunch of states, even though, mean, if we get to 40 states, you know, then we can turn on Shopify.

30:21
I mean, there’s 45 states with sales tax, 40 right now with Amazon warehouses. Yeah, and my feedback to shop, I don’t have any high level contacts at Shopify, but my feedback to Shopify is you got to become a marketplace facilitator because basically, Shopify is a huge phenomena, really kind of running away with the independent store market. But basically that whole gigantic ecosystem is not tax compliant.

30:50
I haven’t heard news about their app recently, but that’s kind of what that app was supposed to do, right? Turn it into a marketplace. Right. Of all the vendors. Yeah. And a lot of people in the Shopify community are here about them turning into a marketplace. They’re kind of opposed to it. You know, they don’t want Shopify to become another Amazon, but I think that’s a different issue. know, Shopify can continue to be a platform that

31:20
really supports these independent stores and doesn’t do what Amazon has done in terms of diluting brand value and having the marketplace have all the brand attached. They don’t need to go down that road. They just need to go down the road of solving these really gnarly state tax issues on behalf of these millions of small companies. Actually, that’d be a huge value add. Like if Shopify handled all the sales tax for you.

31:49
A lot of people would sign up for them over any other platform if they’re handling it. Absolutely. Absolutely. And we would be there instantly. Because actually, I don’t know if you know this, Steve, you said you went to a pluggable site. Believe it or not, we’re running on Shopify. Oh, I didn’t know that. We just don’t have the cart turned on. Interesting. The other thing I noticed was there’s no pop ups. Maybe that’ll be like every three years is an email tip that goes.

32:16
You’re probably going to pop-ups too, right? Because that disturbs the customer experience. Yeah, that’s right. That is my instinct. you did a good job scolding me three years ago, Steve. Do want to scold me on that one? Well, just try it and see how much more email subs that you get, which you can use to launch future Amazon products and that sort of thing. OK, cool. Just try it for a month and see what happens.

32:43
That’s good advice. And then you can even ask your customers if they were disturbed by the pop-up. Okay. They won’t answer me if I ask them that. Well, you can use a poll actually, like on PickFu or something and ask them if the pop-up bothers them. These are just random that you’re surveying. We love PickFu. We use PickFu all the time. Okay. So I wanted to talk a little bit about like the shipping container shortage right now and how that’s affected you and how you’re getting around it really.

33:10
Yeah, I mean, it’s crazy. We used to be able to count on about five weeks from factory door to Amazon, maybe six if we got a backless exam, an x-ray exam. And you basically have to add eight to 10 weeks to that right now. I mean, it is just insane. We’re losing two to four weeks scheduling the container on the origin side. We’re losing time on the water.

33:38
And then once the ships reach the US West Coast, they’re, you know, especially port of LA, they’re sitting there anchored for X amount of time. And then the goods, you know, reach the port and all of the equipment, you know, the chassis, the truckers, you know, everything’s constrained. So yeah, it’s crazy right now. you know, time is money, you know, all of that time that those goods are spending.

34:08
You know, on the water, stuck on ships, stuck at port, you know, that is impact on our cashflow. Okay. And yeah. And then you layer on top of it for electronics products, you have this much worse issue happening simultaneously, which is this chip shortage. And it is, it is just crazy. mean, yeah, I’ve only said only been at pluggable for 10 years, but I’ve been in the electronics industry for about 30 years and I’ve never ever seen anything like this.

34:38
Has the Amazon inventory rules, like the latest ones, have that affected your business as well? Huge. mean, it’s crazy that Amazon’s inventory rules are hitting at the same time as this massive supply chain disruption. Amazon counts the time goods are, as soon as you generate a label, it starts counting against your inbound inventory. So Amazon has gone through a series of kind

35:06
extremely disruptive and onerous inbound limits to FBA and totally changed what kind and what method they’ve used several times. And so right now they’re at a total number of units per account and it’s broken down a little bit by type of units. But yeah, if you’ve got units that you label at the factory, that whole extra two months or so that it’s in transit from the factory would count against you. And so

35:35
So what that means is that you pretty much need to not label things at the factory. You need to have an in-country 3PL that will do the Amazon labels at the last possible moment. So for us, that’s easy in the US because we actually have our own warehouse here in addition to 3PLs. Oh, okay. That’s the piece I was missing. I actually didn’t know that you had your own warehouse. Yeah. Yeah. Okay. Okay. Was that always the case? It’s been the case for six years. Oh, okay.

36:04
Okay. All right. Okay. Yep. So, but we don’t in Canada, in the UK, in Europe, in Australia, in Singapore, in Japan. You know, and so, so, you know, we are hitting the, you know, these exact problems that other people are hitting in the US, we’re hitting them in the other geographies, you know, and Amazon is bouncing around those limits, we’ll ship in.

36:27
We’ll have the ability to ship in a thousand units. We’ll ship in the thousand and then they drop our limits by 2000. And so now we’re, you know, we’re 2000 over and our best sellers go out of stock and our slowest sellers clog up all our spots. You you almost wonder if it’s a systemic strategy on Amazon’s part to get brands like us to do heavy discounting, to move through.

36:55
are lower selling items. Because if you have a thousand brands who are all discounting their low selling items, that means almost every type of product is always going to have, you know, kind of desperate fire sale discounting happening at all times. know, so does that imply then right now the inventory goes to the US and then you ship it to those?

37:17
In most cases, yeah, we have some overseas 3PLs that we’re trying to ramp up. But yeah, it puts us at a gigantic disadvantage to the Chinese brands. Brands that are able to hold goods at the factory in China and then trickle them out around the world are at a massive advantage to brands that can’t. And pretty much unless you have a corporation in China, you can’t do that because the tax laws and some of the other regulations

37:47
really force the factories to get the items exported so that they can recover bats, they paid on the bomb and other things. so, yeah, it’s a real… China’s pretty much the only game in town for electronics, right? Pretty much. mean, so we’ve been really aggressive on getting out of China. So actually, we had a goal last year to get more than 50 % of our products by revenue.

38:15
manufactured outside of China and we hit that. Really? We did. Now we’ve walked into a whole bunch of trouble because actually as bad as the shipping disruption is from China, it’s worse everywhere else because you’ve got this massive shortage of both ship schedules and containers themselves. And the one route that everybody can fill the container every time on is the China route.

38:43
Basically, all the shipping companies, they’re trying to get their containers bouncing as fast as they can between the China and the US because that’s the biggest route. So when we’re trying to ship stuff out of Thailand or Vietnam or Taiwan, it’s actually harder to get those containers scheduled. And so we’re out about two more weeks versus when we ship stuff from China.

39:13
Yeah, I for us, I think we’ve been delayed four to six weeks from our shipments, but it doesn’t affect us as much since again, we have our own warehouse here also. So it’s like a little buffer that just kind of tides things over. Curious, last time we had talked, we talked about Amazon creating their own private label brands of your electronics. Is that continuing to happen? And what have you been doing about that? Yeah, it’s, you know, I think

39:42
The case that we talked about was kind of the big one for us because they took our top seller and very directly targeted us. It hasn’t happened quite so explicitly since that case. They’re still launching new products. They’re still in our space. They’re still not our biggest worry. Our biggest worry by far is our own factories and all the brands they’re launching on Amazon, which Amazon has encouraged Chinese factories to launch their own brands. And that’s a much bigger issue for us than Amazon basics.

40:12
But you know, Amazon basics is still, you know, are you going to your own factories or copying your designs? No, it’s it’s the you know, I mean, you know how things work in electronics. Yeah, Steve, you know, you’ve got the IC vendors who are the ones who really are making the big investments. You know, they’re making the multimillion dollar investments in these new chips. And then they’ll produce reference designs. And then the factories.

40:39
and the brands will look at those reference designs and tweak this, tweak that. But really, usually you’re not doing a ground up PCB relay out unless you really, really have to. I mean, you’re pretty much working from the reference designs. So the whole industry works that way. Yeah, so it’s not that the factories are copying our products. It’s that the factories are doing a set of

41:06
very related products, usually based on reference designs for all the brands they serve. And including now in the last three to five years, especially their own brands that are either explicitly associated with the factory and everybody knows it, or are kind of quietly owned on the side by the same guy who owns the factory or whatever.

41:32
and they have the advantage too. I guess the differentiating factor is firmware and software, right? Yeah, it’s firmware, software, choices, documentation. Our motto is better products, better information, better support. And so we know that we can’t get some massive advantage in any one area. So we just try to be better in dozens of little ways across all three of those products, better information.

42:01
Right. mean, marketing also becomes a huge play and then the content stuff and getting, I guess, influencers to use your stuff. Yeah. But the Chinese brands, they know how to do marketing. We’ve got in our space, this company that has just become a model that other Chinese brands have followed, which is Anchor. They’ve just done a great job really nailing Western marketing.

42:30
and then the other Chinese brands, hundreds of them, are kind fast followers of Anchor and then they innovate in their own ways. So is Anchor one of the brands that got banned? can’t remember. No, they’re not. not. know, Steven Yang and I know each other going way back. I kind of spilled the beans on our model when he was doing Laptop Mate before he created Anchor. And we’ve been kind of friends and competitors the whole time.

42:59
Stephen’s a really good guy and while Anchor has done some of the things we’re talking about, they’ve always done it with the customer in mind. They’ve never been, I would say, the way I would characterize it is they’ve never been black hat. They’ve always been, if they did anything, it was kind of gray hat. I would, in a sense, say the same thing to ourselves because earlier on, were, well, we never paid for reviews, we gave out, did we even give out free?

43:28
product for reviews years ago. Anyways, I know, you’re white hat, Bernie. I think you’re the whitest white hat person I know. Right. Yeah. Cause we were always, you know, we’re always thinking that way. Right. I mean, because in the end we were always trying the whole, the whole founding principle of the company is we wanted to be a better device company. Yeah. Kind of did right by consumers. So, you know, that’s always been, you know, that customer focus has been the thing that we, we, we have no reason to exist other than that.

43:58
Yeah. Because it really everybody, everybody else can do other things better. You know, it’s only and so it’s so the good thing is, is 10 or 11 years on, we actually have a huge amount of brand identity and brand loyalty. And it’s taken, you know, it’s it’s it’s almost like this insane patience that’s required to build that, you know, but you know, but I’m really proud that we have. I wanted to kind of circle back.

44:26
to our launch strategy, because I know you have a tool and I know you rely on white hat techniques like PPC and as it gets more competitive and you’re saying it’s pay to play now, so that means everyone’s paying to play. I know you have a tool PPC Ninja that I’m sure you use your own dog food, right? eat your own dog and use PPC Ninja. What are some of the things that you do to differentiate yourself from the competition that’s running PPC?

44:54
So PPC Ninja is both, we ingest all of your Amazon advertising reports, normalize all the data, connect all the data, and allow you to basically pivot and look at that data all kinds of different ways that’s completely connected and also kind of goes back in time. You’re not limited by just like doing a pivot table in Excel on one report for one limited period of time. It’s all reports, all data, all time.

45:23
And so, and then on top of that kind of viewing and pivoting, bids are really kind of time consuming to do, especially if you do it manually, we have bid automation. So we’re, and we do it in a really interesting, sophisticated way, especially when you launch a product, you you really don’t know what is the most effective bid level to be at.

45:47
And one of the things we have is, that’s kind of cool, is we’ve got these bid charts. Like in any keyword or campaign, you can just click and get a chart of any of the metrics of that keyword back in time, including the bid. And so you can kind of see the bid going up or down as we might have changed it at certain points. And then what that did to the sales numbers, to the impression numbers, to the conversion rate.

46:15
any of the other ad metrics. And so we really get to see some really interesting effects. Like one of the things we talk about a lot is, there’s a lot of kind of cliffs and then also on the downside end, I guess you call it on the upside, I what the correct term is for a cliff on the upside, plateaus call it, where- You’re talking about diminishing returns, right?

46:39
Well, you that you might be 90 cents and yet at the 90 cent level, you’re getting a really high percent of the total number of impressions. And then, but, maybe your ACOS isn’t quite to your metrics. so you drop your bid from 90 cents to 85 cents. What can happen with Amazon advertising is your impressions can fall off a cliff. You know, you, you, dropped to 85. Yeah. Your ACOS drops as you intended, but your impressions.

47:08
go to like one tenth the number of, even though you only dropped five cents, know, a little under 5%, your impressions drop manyfold. And it’s just because what ends up happening is even though it’s a second price auction for the bids, and even though there’s quite a bit of kind of rotation going on in the Amazon algorithms, still you might’ve fallen below a pack of competitors who are all advertising on that.

47:35
same keyword in that 85 cent to 90 cent range. And so your impressions drop off entirely. so basically, first of all, you’ve got to be able to see things like that happening. And so our tool lets you see that really easy. Right in the UI, just click and you’ve got these super nice charts. Our bid automation works in a really cool way. So one of the problems when you launch a product is you’re trying to find kind of that appropriate bid level.

48:05
but there’s not a lot of data there, not a lot of history, of course, because you’ve just launched. And so you want to make decisions at kind of the earliest responsible moment. So our algorithm, when this tool was a part of another tool and then basically up until last year, was to just use fixed periods of time. We would look back two weeks and make the recommendations based on that.

48:31
And so the way the recommendations work is every day you have recommendations popping up to adjust your bids up or down on potentially hundreds of keywords. Very easy to just kind of select all and accept all of them or look through the list, select all and then maybe look through the list and remove a few. So, you you would get those recommendations based on that two week data. So our algorithm now though is to have it be based on data sufficiency.

49:01
So as soon as you have enough impressions, clicks and sales where it’s considered sufficient to make a judgment on the effectiveness of that, basically coming down to the ACOS of that, then we’ll make a bid recommendation. So if you have a keyword that in one day will generate a few hundred impressions, 50 clicks and then two sales,

49:29
that will meet the sufficiency requirement and we’ll make a bid recommendation that day to, know, if sales are occurring at a kind of an effective ACOS to increase your bid and kind of get more impressions, more sales. Whereas if you have a slower running keyword, it might take you four weeks to generate that amount of sufficiency. So you will not get, you know, that bid recommendation on day one or day two and have it be based on kind of, you know, incomplete or erroneous data.

49:59
you’ll get it at that four week mark. So basically your fast moving keywords, we very quickly allow you to kind of optimize those bids within days or a week or two of launching your product. And then your long tail slower moving keywords, those will take longer, it’ll be stretched out kind of appropriately as the data comes in. And it basically allows us to launch products and really dial in the ads.

50:28
way quicker than a lot of other tools that use just timeframe based bid recommendations. So is it based on impressions and clicks as opposed to just time essentially? Correct. That’s right. Impressions, clicks and sales. Right. Okay. Cool. You know, I actually have all the tools, like all the competing tools in my disposal. I haven’t actually tried yours yet. You should. Yeah. Maybe I will fire it up. I just don’t like spreading out my API credentials to like every tool in the planet.

50:56
Right. I’ve done that. I guess it’s not a big deal. Well, you we don’t we specifically don’t ask for MWS credentials. So it is it’s just purely add credentials. OK. OK. And we do that again because we don’t want to, you know, create that risk or that fuzziness of why do these guys want our MWS credentials? What are they going to do with those? Those are so powerful. So, yeah, so we are at API only. So it’s a lot easier. OK, yeah.

51:24
I do notice, and I’m curious, maybe I will try your tool after this interview, I do notice that a lot of the analytics is not, it doesn’t show me everything I need to know and the bid suggestions are often like a big black box, which I would imagine for the regular user that’s fine. Or most people just want to pay someone to just do it all, I guess. Right, yeah, and we’re also an agency where they can just have us in.

51:51
Yeah, so PPCNinja is, we’ve got the software product, but then we also have an agency because, I mean, so many people do want the thing just taken care of, but the software allows us to do the agency side of it really efficiently. Okay. Well, cool. Bernie, where can people find you if they have any questions about the tool or your business?

52:14
Yeah, just go to ppcninja.com and we have a 14 day free trial on the software. then, you know, what I really recommend actually for, for a lot of your audience, Steve, is we’ve got a free four week mastermind. So it’s an hour a week, each of four weeks. We typically have a few dozen people that attend each session that we run. And I think there’s a, there’s a signup right on ppcninja.com for that. And it’s

52:42
taught by Ritu Java, who is our CEO and she’s… Yeah. Yeah. Yeah, Steve, you know Ritu. I love Ritu. I love her. Ritu is awesome. And people just love this mastermind and it is free, which is kind of crazy, but it’s basically our main inbound funnel. And the feedback that we get off of that mastermind is so positive. Ritu kind of goes over all the basics of how to succeed with Amazon advertising and…

53:10
Ritu and her team are the ones who manage my budget for Plugable, is several basically on Amazon about 1.5 million a year in spend. In total, we manage several tens of millions of ad generated sales on Amazon. So Ritu really knows what she’s doing and it’s actually a really, really fun and effective teacher.

53:34
So it’s a different kind of mastermind that lots of interaction with people and we get people from around the world, but also a lot of great content. So really encourage people to try that out. Cool. And it’s priced right too. Yeah, that’s right. Yeah, can’t beat that price. Hey, well, Bernie, thanks a lot. I mean, it’s great catching up with you after all these years and hopefully we can hang out in person again. Yeah, I definitely hope so. It’s a new world, but hopefully it’s a new good world. All right, take care. Okay. Thanks, Steve. Bye.

54:05
Hope you enjoy that episode. Now I sincerely believe that selling on Amazon and more so selling on your own website is still a great opportunity and the current challenges we are facing with inventory are being felt by everyone worldwide right now. But there’s a ton of demand and e-commerce is the future. For more information about this episode, go to mywifequitterjob.com slash episode 375. And once again, I want to thank Postscript, which is my SMS marketing platform of choice for e-commerce. With a few clicks of a button, you can easily segment and send targeted text messages to your client base.

54:35
SMS is the next big own marketing platform and you can sign up for free over at postscript.io slash dv. That’s P-O-S-T-S-R-I-P-T dot I-O slash dv. I also want to thank Klaviyo, which is my email marketing platform of choice for ecommerce merchants. You can easily put together automated flows, an abandoned cart sequence, a post purchase flow, a win back campaign, basically all these sequences that will make you money on autopilot. So head on over to mywifecoderjob.com slash K-L-A-V-I-Y-O.

55:02
Once again, that’s mywifecoderjob.com slash K-L-A-V-I-Y-O. Now I talk about how I these tools on my blog, and if you are interested in starting your own eCommerce store, head on over to mywifecoderjob.com and sign up for my free six day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.